First Quantum asserts rights as Gecamines seeks bids for Kipushi

Vancouver – In a battle launched by competing advertisements in mining and business publications, First Quantum Minerals (FM-T, FQM-L) and Kumba Resources of South Africa have threatened legal action against companies seeking to acquire the Kipushi mine through an international tender process initiated by a state-owned mining company controlled by the government of the Democratic Republic of Congo (DRC).

Through notices placed in various publications in late August and early September, La Generale des Carrieres et des Mines (Gecamines) invited tenders for a “partner” interesting in exploiting the past-producing mine in Katanga province, near the border with Zambia. Mining companies from all over the world were invited to participate through a letter of intent, by paying a non-refundable deposit of US$25,000, and signing a confidentiality agreement. The companies would then receive a technical file on the project, as well as technical briefings to be held during a series of site visits from Sept. 20 through to Oct. 13.

First Quantum and Kumba responded by placing notices warning potentially interested parties that they intended to assert and protect their “valid rights,” and those of their affiliates, through “all necessary legal actions.” The companies also advised that any discussions with Gecamines relating to the Kipushi mine and related facilities “could be qualified as a violation” of those rights.

Kipushi, originally known as the Prince Leopold Mine, was placed into production by Union Miniere of Belgium in 1925. The mine was nationalized by Gecamines in 1967, and produced continuously for 42 years until 1993, when it was placed on care-and-maintenance because of a lack of foreign exchange and reinvestment. During that period, 60 million tonnes grading more than 6% copper and 11% zinc were mined and processed from surface to a depth of 1,200 metres.

First Quantum produces copper and gold at its 80%-held Kansanshi mine in Zambia, and copper at its wholly owned Bwana/Lonshi operation spanning the borders of Zambia and DRC. The company has other advanced projects in Africa, and secured rights to Kipushi and the Kolwezi tailings project in DRC by acquiring 100% of Adastra Minerals, previously known as American Mineral Fields, in mid-August of this year. American Mineral Fields had signed a framework agreement with Gecamines to revive and rehabilitate the Kipushi mine in 1996.

Pretoria-based Kumba Resources became involved after finalizing a joint venture agreement in 2002 to earn a 50% interest by completing a bankable feasibility study, among other things. Adastra and Kumba formalized their joint venture agreement for the potential re-development of the mine a year ago, and continued negotiations with the government regarding “the appropriate fiscal regime” while their technical and economic assessments were taking place.

Kumba is the largest producer of refined zinc in Africa, and is also a major producer of high-purity sulphuric acid, increasingly used at new or proposed mines treating oxide copper resources through the solvent-extraction electrowinning process.

In its call for tenders, Gecamines noted that in addition to zinc and copper, the Kipushi underground mine is an important potential source of sulphur, “enabling Gecamines to produce acid sufficient to fill a large part of the needs of the Katanga mineral region.”

Gecamines says it is seeking a partner “with proven credibility on the international market” and expertise in copper and zinc, along with the financial and human resources to develop the Kipushi project. The state-owned mining company also expects all interested parties to submit “firm offers” at the end of their technical visits.